Discussion on Exporting 737 Max to Air India
140 Pre-Orders Frozen Due to China's Refusal to India
Stock Price Also Slumps for 3 Years Amid Earnings Decline
[Asia Economy Reporter Hyunwoo Lee] As Chinese airlines continue to refuse to accept aircraft deliveries, the American aircraft manufacturer Boeing is exploring a last-resort plan to resell these aircraft to India. Poor sales performance in China has led to deteriorating earnings, and the stock price has not recovered for over three years.
According to Bloomberg on the 13th (local time), Boeing is recently discussing the export of 150 Boeing 737 Max aircraft with Indian airline Air India. Air India is reportedly planning a large number of new aircraft orders after being acquired by Tata Group, India's largest conglomerate.
John Bruns, Boeing's Vice President of Marketing for India and Southeast Asia, said in an interview with Bloomberg on the 11th, "Due to uncertainties around China, the Indian market is becoming increasingly important," adding, "We plan to employ more than 5,000 people in India going forward. Boeing's India subsidiary will become Boeing's largest overseas branch."
Vice President Bruns expressed ongoing concerns about the negative outlook for the Chinese market. He explained, "The recovery in sales in China remains slow," and "Currently, there is not much demand for new aircraft in China."
Boeing is trying to offset losses by reselling Boeing 737 Max aircraft, which Chinese airlines have refused to accept, to India. Chinese airlines have suspended commercial operations of the Boeing 737 Max model for more than three years since the crash accident in March 2019.
As a result, many existing orders from Chinese airlines have been canceled, leaving more than 140 Boeing 737 Max aircraft without buyers and waiting. The sales value of these aircraft is estimated to be close to $5 billion (approximately 6.58 trillion KRW).
Earlier, on the 30th of last month, China Southern Airlines announced it would resume flights of the Boeing 737 Max model but abruptly canceled the plan, further lowering expectations for the resumption of commercial operations in China. China Southern Airlines attempted to restart commercial operations by conducting a test flight of the Boeing 737 Max CZ2007 passenger aircraft earlier this year, but aviation authorities have reportedly continued to delay approval for resuming flights.
This sluggish performance in the Chinese market is leading to poor results for Boeing. The third-quarter earnings announced by Boeing at the end of last month showed revenue of $16 billion, a quarterly net loss of $3.3 billion, and earnings per share (EPS) of -$6.18, significantly missing market expectations.
The stock price decline is also ongoing. As of the 11th, Boeing's stock price was $177.49, down more than 32% compared to the beginning of the year. Boeing's stock price, which reached an all-time high of $440.62 in early March 2019 just before the Chinese government announced the commercial ban on the 737 Max model, has not recovered for over three years.
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